Customs, Excise and Gold Tribunal - Delhi
Collector Of C. Ex. vs Plastipeel Chemicals And Plastic P. ... on 15 December, 1997
Equivalent citations: 1998(99)ELT639(TRI-DEL)
ORDER
S.K. Bhatnagar, Vice President
1. This is a Department's appeal against the order of Collector (Appeals), Bombay dated 15-11-1990.
2. The respondents have sent a letter dated 24-2-1997 mentioning inter alia that if their prayer for transfer of appeal to Bombay Bench is not granted, then the written submissions made in the applications may be considered and their personal appearance may be excused. It is not possible to transfer the matter to Bombay due to administrative reasons and therefore, in terms of the alternative prayer, we are taking up the matter for hearing.
3. We have perused the records the heard learned Departmental Representative. Learned DR stated that in this case, the excisability and classification ~* of four products is involved :-
(a) Mahaboli -10 lubricants - it is made out of duty paid grease to which 3% M0S2 and anti-rust additives are added.
(b) Mahamoli-20 lubricant is made out of duty paid grease to which 5% M0S2 and other ingredients are added.
(c) Mahamoli Anti-seize lubricant - it consists of 50% M0S2 and other ingredients.
(d) Mahamoli Dry Lubricant - it has duty paid M0S2 to which 2% Anti-oxidant and rust inhibitors are added.
4. The Assistant Collector had held that the Mahamoli range of products were correctly classifiable under Tariff Item 68 and the classification list No. 1/82 had been correctly approved. The assessees appealed against the . order and the Collector (Appeals) had disposed of the appeal by the following finding :-
"In the result, the appellants' submission that the disputed products except Mahamoli Dry Lubricant (which in any case will not attract further duty as held by me earlier in this order) would fall under erstwhile Tariff Item 11B is accepted and their contention that all the products would not fall under Item 68 inasmuch as no manufacturing process has taken is also accepted."
5. In fact, the matter had come up earlier before the Tribunal and is coming up in the second time and in this connection, he would draw attention to the appeal memorandum filed by the Department.
6. It was the Department's contention that Mahamoli Dry Lubricant which is chiefly composed of M0S2 and additives and anti-oxidants, was dutiable because a new product had come into existence and the learned Collector had erred in holding that no process of manufacture was involved. It
7. It was also their submission that the remaining three items had grease and other ingredients. In view of these ingredients added to the grease, new products have come into existence classifiable under Tariff Item 68. Learned Collector had, therefore, erred in holding that the mere addition does not amount to a process of manufacture and that the products except Mahamoli Dry Lubricant were classifiable under erstwhile Tariff Item 11B.
8. It was also his submission that in this connection, he would like to draw attention to the order-in-original which is based on a chemical test report and in view of the detailed reasons given by the A.C., he would pray that the impugned order may be set aside and order-in-original may be restored.
9. In the written submissions, the respondents have stated inter alia that Mahamoli Dry Lubricant is made out of duty paid M0S2 which is itself a dry lubricant. It was imported and mixed with 2% of anti-oxidant and rust inhibitors and packed in small size packings and this activity does not amount to manufacture.
10. It was also their submission that the grease and other three products were purchased from M/s. Balmer Lawiie and M/s. Hindustan Petroleum Corporation and as such, has already suffered duty under Tariff Item 11B. Adding the M0S2 and other additives only improves the lubricating quality of the grease which is itself a lubricant. Learned Collector has correctly decided that no manufacture takes place in all the four products. It was also their submission that reading the order as a whole, there is no apparent contradiction as learned Collector (Appeals) apparently meant that the products continued to fall under Tariff Item 11B and therefore, they would pray that the order may be upheld.
11. We have considered the above submissions. We observe that insofar as the first product namely, Mahamoli Dry Lubricant is concerned, the Department has not been able to show any evidence which would go to indicate that the factual observations made by the Collector were, in any way, erroneous and a new commodity known to the market, had come into existence as a result of the anti-oxidant and rust inhibitors having been added to M0S2 which was already in the nature of a dry lubricant. In this connection, we see that "The Condensed Chemical Dictionary' by Gessner G. Hawley describes 'M0S2 as Molybdenum Disulphide' and shows mat its uses include "lubricants in greases, oil dispersions, resin bonded films, dry powders, etc., especially at extreme pressures and high vacua; hydrogenation catalyst." Therefore, in the absence of any evidence that a new product has come into existence, the Department's case remains unsubstantiated.
12. It may also be noted in this respect that the A.C. appears to have confused between various products as he has decided all the four products with reference to the same chemical examiner's report which refers to grease whereas the M0S2 itself is a dry powder and the Hawley's Dictionary indicates it as 'Black, crystalline powder soluble in aquaregia, sulphuric acid and insoluble in water'.
13. Furthermore, even the Chemical Examiner's report has not been filed and no other technical or commercial literature or report has been filed. In the above circumstances, there is no reason to interfere with the order of the Collector insofar as this product is concerned.
14. Insofar as the remaining three products are concerned, the relevant Tariff Entry 11B reads as follows :-
"11B. Blended or Compounded Lubricating Oils and Greases -
"Blended or compounded lubricating oils and greases" means lubricating oils % and greases obtained by straight blending of mineral oils or by blending or . compounding of mineral oils with any other ingredients.
Explanation - The expression "mineral oil" has the meaning assigned to it in Explanation I to Item No. 6."
Since both blended or compounded products were covered, once any other ingredient(s) is added to grease, Section 11B (sic) is attracted. The fact that the grease which is utilised was already duty paid is not relevant. What is important is to see whether a new product has come into existence. Again, it is not relevant as to whether the product would also fall under the same heading or not for this will not alter the position (either way). What matters most is the scope of Section 11B (sic).
15. In this respect, we find that the Board had also issued a Tariff Advice No. 3/74, dated 29-4-1974 which reads as follows :-
"Blended or compounded lubricating oils and greases. - (1) The following three types of cases fall outside the scope of Tariff Item 11B provided they are made from blended or compounded lubricating oils on which appropriate amount of duty has been paid under Item 1 IB of Central Excise Tariff -
(i) where two or more duty paid blended lubricating oils (Item 11B of the Central Excise Tariff) are blended without addition of any additives;
(ii) where two or more duty paid compounded lubricating oils (Item 11B of Central Excise Tariff) are compounded by addition of small quantities of additives; and
(iii) where the duty paid blended lubricating oils (Item 11B of Central Excise Tariff) are converted into compounded lubricating oils by addition of small quantities of additives.
(2) Lubricating oils and greases produced by manufacturers who adopt the method where no mineral oils or other ingredients are added in the process of recovery, would fall outside the purview of Tariff Item 11B.
In other cases, where any mineral oil and/or other ingredient(s) is added in the process of recovery the duty would be payable on the blended or compounded lubricating oils and greases salvaged from the used blended or compounded lubricating oils. Therefore, duty shall continue to be collected from such manufacturers."
"Blended or compounded lubricating oils. - Certain doubts have been expressed to significance of the words "small quantities of additives" occurring in para l(ii) and (iii) of the Tariff Advice No. 3/74, dated 29-4-1974. It is clarified that irrespective of percentage of additives added to convert compounded lubricating oils, into blended lubricating oils and blending lubricating oils into compounding lubricating oils, no further duty liability would arise. However, where such lubricating oils are subject to conversion resulting in the manufacture of 'greases' then such greases would attract further duty liability. In view of this, paragraphs l(ii) and (iii) above may be deemed to be modified accordingly.
[M.F. (D.R.B.) Letter No. 89/8/75-CX. 3, dated 17-4-1976]"
16. Therefore, we hold that in the absence of anything to the contrary, an excisable product classifiable under Tariff Item 11B had come into existence by virtue of the nature of this entry. Our view is also supported by the above tariff advice. Hence, these three products were liable to duty, if any leviable under 11B during the relevant period. Since we have already held as above, the question of Tariff Item 68 does not arise. In any eventuality, the Department has not produced any evidence as to why the classification should change from 11B to Tariff Item 68 which is a residuary entry and is attracted if only no other item was applicable.
17. The order of the Collector (Appeals) is modified only to the extent indicated above and the appeal is disposed of in the above terms.